Even thriving small businesses frequently need more cash than they can borrow from a bank. One of the least-known commercial financing strategies for small businesses is potentially the best strategy to quickly obtain needed cash for growing their business. This commercial financing strategy uses an under-utilized business asset (credit card receivables) to obtain business cash advances based upon a merchant’s sales volume. These business cash advances typically vary from $5,000 to $300,000. Small businesses will frequently benefit from converting future cash flow into immediate working capital. The most likely candidates to benefit from this strategy are restaurants, bars, service businesses and retail stores.
This strategy is also known as “credit card factoring”. Many small businesses have relied upon a commercial financing strategy called “receivables factoring” which allows them to sell their future receivables at a discount. Most small businesses cannot adequately document their receivables in order to qualify for this kind of commercial financing. Many other small businesses (such as restaurants, bars, service businesses and retail stores noted above) simply do not have such receivables to rely upon as a commercial financing tool.
What these businesses do have in many cases is documented sales volume and documented credit card sales activity. It is this documented level of sales volume and credit card sales activity that becomes a financial asset to the business. Business cash advances up to $300,000 can be obtained based on a merchant’s sales volume and future credit card sales.
Before employing this strategy, small businesses should realize that there are several recurring potential problems that they need to anticipate. Ten common problems that small business owners should avoid when employing this strategy are highlighted below. Preferred/Recommended business cash advance requirements are shown in parentheses after each potential problem.
Up-front fees (Preferred/Recommended: No up-front fees)
Closing costs (Preferred/Recommended: No closing costs)
Financial Statements required (Preferred/Recommended: Financial statements not required)
Collateral required (Preferred/Recommended: Collateral not required)
Fixed term to pay off the business cash advance (Preferred/Recommended: No fixed term for repayment)
Fixed payments to pay off the business cash advance (Preferred/Recommended: No fixed payments)
High credit scores (680 to 700 or higher) required to qualify (Preferred/Recommended: Credit scores of 500 or better)
2-3 years or more in business required to qualify (Preferred/Recommended: 1 year in business)
12 to 24 months of documented credit card sales of $10,000 to $25,000 or more required (Preferred/Recommended: 6 months of $4,000 or more)
Maximum business cash advance of $10,000 to $50,000 (Preferred/Recommended: Maximum cash advance of $250,000 to $300,000)
Not all of these potential problems will be relevant to each commercial borrower. Most commercial borrowers will encounter at least 2-3 of these problems if they are reviewing business cash advance programs that use credit card receivables as the basis for obtaining short term business loans. It is not necessary to accept any of these problems in order to obtain business cash advances based on future credit card sales. There are viable credit card receivables programs which avoid all of the problems described above.
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There are many situations where you will be faced with the need to take credit card payments or find an instant online business 0 apr credit card. You may be opening a new business, or expanding what was once a small sideline into a remarkably real business. In today’s environment, you will need to be able to process payments of all sorts, and with the right kind of credit card machine at your disposal, you’ll be able to do so.
How to accept credit card for business will be your first concern. Accepting credit can be a big step for a small business and there are many things that you should keep in mind before getting started.
The best place to start is the bank where you do your other business transactions. For accounting purposes, it might be best to set up a separate account for your business transactions. At the same time, you can get a service package for your business. Most likely, you’ll find yourself referred to a third party processor that can get you set up.
One thing that you will have to consider when getting all of this set up is the type of credit card machine you’ll be using to accept payments. To find the right sort of model for you, you must think about what your business is like and when and where you will be taking payments.
The most basic sort of credit card machine is stationary. You’ll find that they come with and without printers and if you run your business from home or have a shop front, this might be ideal. These can be mounted on a wall or secured to a desk or countertop and are perfect for most businesses.
If you travel or are constantly on the go, a wireless machine might be something that you need to look into. A wireless credit card machine in the UK and worldwide is something that is used by people like taxi drivers to take fares and if you are always on the move, this might be the best option for you. If you are vendor of some sort, and travel to conventions and seminars, this will be ideal because not only can it travel with you, but it can also sit at home and act as a stationary machine.
You might also want to consider the fact that you might not need a physical machine at all. If you do all your transactions over the phone or the internet, there is a good chance that you will be able to use a virtual credit card machine. By using your computer and internet to interface, you’ll be able to run the cards of customers through a virtual terminal. Aside from not having a machine, this option behaves identically to both wireless and stationary credit card machines and is cheaper than purchasing physical equipment.
Starting a business is often a bit nerve wracking, but one thing that should be breezy and simple is taking your customer’s money! Make the right choice when it comes to credit card machines and you will be able to do business in the way that best suits you.
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Any online retail business that does not have a credit card processor set up should definitely consider this as an option. Often times web business owners feel overwhelmed with the prospect of choosing a credit card processor for their business.
Many of them feel that the fees associated with working with an online processor are too much and not worth the benefits. However if you closely weigh all your options you can see that if you carefully research credit card processors you can find one that best fits your business.
It may not seem like it but any inconvenience that you provide your customers at the sell point can result in loss of sales. At first this may not seem like a huge deal but these minor losses can add up to a substantial decrease in revenue.
There are some simple things that you can do to eliminate the choices and make the processes headache free. First off make sure that you do not get involved with a processing company that will charge you fees just to review your application or get you up and running.
Your next step will be to gauge the level of customer service that a credit card processor will provide you. Obviously not every business is the same and all have different needs. You can do this by talking with your service rep about simple questions at first and testing their response time and effort to earn your business.
On the technical side one thing that is critical to find out is what kind of back services your credit card processor has in place. If they are doing server maintenance of if something goes down how long before their backup system kicks in. If you go with a company that does not guarantee a failsafe back up you can be stuck unable to process payments for several hours. This can seriously hurt business and needs to be addressed seriously.
You also want to look for as many options as possible when it actually comes to receiving payments. In addition to credit card processing the ability to accept checks by internet, phone or fax is always a great option.
Finally you should obviously consider the cost of the credit card processing company you’re going to select. At this point you should regard the transaction fees, for instances if in your business you deal with a lot of minor transactions low fees are of major concern. On the other hand if you deal with fewer transactions but at higher costs you may be looking for other features as well.
Overall as tedious as this process is it must be taken seriously in order for your business to prosper. It’s always a safe bet to go with a popular company that has a proven track record. This information is easily obtainable by checking consumer advocate sites like the BBB and others. Another method to use is to find prominent sites in your niche and see what service they are using.
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Credit card readers or the terminals are becoming increasingly popular in the global marketplace. It is a fine way to serve you customer easily while for a customer it is a convenient mean to pay off his due payments. The unexpected amount of ease that these card processors are bringing in to the market is really praiseworthy. The facility of making cashless transactions entices the common buyer to increase their buying capacity.
From the conception of business term it has accommodated newer things so as to cater the needs of the different customer segments. The dynamic nature of business has helped the consumers to avail peace of mind. Normally the people do not travel with heavy cash amounts that they usually prefer sometimes back. The card reading equipments are assisting them to travel freely and removing the barriers of price sensitive shopping.
Wireless credit card transactions are an improved version of the typical card payment. Almost every business owner uses these fantastic machines in order to make the billing process easy. But the usage of this terminal is really ubiquitous in the retail sector. These machines are popping up in to nearly every business field. Traditionally the fixed credit card machines were made to make the payments.
However with upgraded technology the wireless card terminals are designed which are the hand held devices that facilitate wireless transactions. You can travel with them and can easily bring it to the place where you need it. The larger display with backlit and built in printer ensures reliable transactions. As compared to the traditional model this innovative model is quiet improved, user friendly and mobile.
You need not to get away from you seat for time and again as this small device can also be placed to your table. The wireless card transactions are really simple, authentic and speedy. They allow you maximum cashless shopping benefits. There are countless advantages that we get out of using these surprising payment tools. For the sales person who is on the move, a busy executive and the aged people who can not travel with cash, it is a safe alternative. You just need to swipe your card in the machine and the amount is automatically transferred to the other account.
In a nutshell we can say that these payment options are emerging as a latest trend and are blessed with the uniquely forward approach. Therefore go for those shops only that accept credit card and posses wireless card terminals.In a nutshell we can say that these payment options are emerging as a latest trend and are blessed with the uniquely forward approach. Therefore go for those shops only that accept credit card and posses wireless card terminals.
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The way technology has developed in recent years, the internet has fast become prime real estate for all businesses, regardless of what they sell or what service they offer. And as the world becomes more electronically interconnected, most savvy business owners know this and are looking to jump onto the gravy train.
But every business of business person has to look into a few details before trying to foray into the world of ecommerce. The first, and probably most important thing to bear in mind, is the fact that the website that your business will use to be its window to the world will not only have to offer something that will be considered of value to the internet community at large, but will also have to be user friendly as not all people that frequent the internet are technically savvy. This is a great step in getting potential customers to stick around a little longer on your site, allowing more time therefore for a possible sale. Secondly, you will need to make sure that you set up a method of being able to accept credit card transactions through your site.
This goes a long way to also gaining the trust of a potential customer; and this trust is not automatically given - it has to be earned. It is, therefore, vitally important that any new online business locate a merchant provider that is both creditable and trustworthy. With people become more attuned to shopping online, they are becoming extremely careful when it comes to giving out their details. The last thing they would need is their details being stolen or misused online. Therefore, the slightest worry they may have over the integrity of either your site or your credit card processing company and they will be off like a shot.
This is where trustworthy credit card merchants come into play. The top companies, for example, will always use the most up-to-date technology to secure any and all transactions from their client’s sites. This in itself is a reassurance to your customer.
Although getting a merchant account set up on your website is not a difficult process, choosing a merchant that is trustworthy and creditable could prove to be a bit more taxing. If you learn to look around though, spotting the “wheat from the chaff” becomes all the more apparent. The good credit card processing companies will always go out of their way to assist you and offer advice such as the ideal solutions for your type of business or site. They will also offer clear, concise instructions on how to set up the merchant gateway.
Trust is the number one consideration that you should bear in mind when it comes to your customers; if you can offer them a trustworthy solution when it comes to online payments, then half the battle is won.
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Is your business considered high risk? And can you still get a merchant account?
In credit card processing, there are many different reasons why a business may be considered high risk.
First, it may be the actual business industry that has been tagged “high risk”, such as travel, multi-level marketing (MLM), e-commerce, aggregators or collection agencies.
Second, the reason may simply be the business volume that places a business in the high risk category.
And third, it may be a reflection of the business or the business owner’s credit history.
The question still arises: Can High Risk Merchants Obtain a Merchant Account?
The answer is YES. But you have to know where to go for the expert advice and guidance needed so you and your business are safe from excessive expenses often associated with high risk merchant accounts.
Working with an expert in high risk merchant accounts is critical to the success of obtaining the best merchant account solution for your business.
5 Points to Consider When Selecting the Best Merchant Account for Your High Risk Business:
Your application needs to be handled by a high risk professional expert
Your high risk merchant account processor should have experience with merchants in your business industry
The high risk merchant account processor needs to have access to numerous credit sources - including more liberal banks and offshore options
If your business does have to be taken offshore, your high risk experts need to work on getting the lowest rate available
All rates should be disclosed prior to contract with the high risk credit card processing company
3 Insider Tips To Ensure Approval for a High Risk Business Merchant Account:
Do you have a poor credit rating? Be honest about disclosing any past financial challenges. Acknowledging previous liens, bankruptcies, judgments, etc. will only improve your credibility and alleviate one more barrier.
Be open to offshore options as sometimes they can offer your business the best merchant account solution.
Shop around for a credit card processor that has expert knowledge in high risk merchant account approval - and don’t be afraid to ask questions. The more you educate yourself in the process, the more you will recognize a good high risk merchant account processor giving you intelligent, experienced answers to your questions.
Operating a high-risk business does not exclude you from being able to process credit cards. Like any business, you want to provide your customers with as many non-cash payment options as possible. It is statistically proven that accepting credit cards help generate revenues and stimulate impulse purchases.
Owning a high risk business doesn’t mean you won’t be able to open a merchant account. It does mean, however, that you may have to do a little more in setting one up that is right for your business. Do your “due diligence”, shop around and ask questions to find a credit card processing company that specializes in high risk and offshore merchant accounts and will offer their expertise to businesses who fall into the high risk category.
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If you operate on a budget, as most businesses do, and you need to accept credit cards, you need the right credit card terminal for business budgets. Suppliers of business machines such as these understand that different businesses have different level needs when it comes to the machinery, but they also know that they are dealing with a wide range of budgets as well.
While you may not think that you can afford this type of machinery for your business, if you crunch some numbers, you will find that you can afford to not accept credit cards even less. Remember that there are typically solutions for every budget when it comes to accepting credit cards. You just have to find the right solution for your situation.
Just because you have a small budget, this is no indication that you have to purchase a less quality credit card terminal for business. Instead, you could purchase a high quality terminal with fewer features, such as smart cards and store and forward features.
You might also find that one of the cheapest solutions is to use your own computer as a terminal, instead of purchasing a separate one. In this instance, you simply use software provided by through your merchant account, but you must find a merchant account that offers this type of processing. However, this option will not work in many instances. For example, customers are not able to swipe their own cards. In most cases, this solution works best for online payments, and not as a Point of Sale solution.
If purchasing a credit card terminal for business is beyond your budget, even with fewer features, you can also explore the lease option that is often available. This option is usually used by businesses that need a mobile solution, for a short period of time. You can use this option as well, but over a long period of time, it does become the most expensive option. Ideally, if you go with the lease option in the beginning, it should be for the purpose of gaining the funds needed for an outright purchase in the very near future.
It is vital that you use caution when purchasing this equipment as well. In this case, it isn’t the equipment that you have to be concerned with as much as the rules and regulations of the company that you purchase your equipment through. Their equipment may only work with their processing service, and if you change to a different merchant account, you may be forced to purchase new equipment. Ideally, you want ‘universal’ equipment that will work regardless of the credit card processing company that you choose to work with.
Finding the right credit card terminal for business isn’t difficult. In the end, it is just a matter of asking the right questions, and determining what the best options and features are for your business. If you are working with a quality company for the purchase or lease of your equipment, your sales representative should be able to help determine exactly what you need, and introduce you to options that you can afford.
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OK, so you just took that huge leap of faith and opened up your own business. Whether you are a retail storefront, restaurant, run a mail order business or are purely internet based, the ability to accept credit cards is critical to the growth and ultimate success of your business.
What’s the bottom line? Offer your customers as many payment options as possible to avoid turning away business.
Credit and debit cards alone account for about one third of all personal consumption expenditures in the U.S. - a share that increases every year. And, in times of economic downturn like these, consumers have less cash flow and are putting more purchases on their credit cards.
With that said, following is a list of common question many new business owners have in the area of credit card processing.
What is the first thing I need to do to start accepting credit cards?
You will need a merchant service provider who will set you up with a merchant account for your business. This will give you the ability to accept credit and debit cards in person, online, or over the phone.
How long will it take before I can start accepting credit and debit cards?
With leading processors, you can get you up and running within the same day in many cases.
How much do I have to pay to accept credit cards?
Like anything, rates vary depending on processor you are dealing with and the type of business you operated (i.e. storefront, ecommerce, mail order, etc.) It is important to find a merchant service provider who not only offers guaranteed low rates, but will provide your business with PCI compliant equipment and knowledgeable 24×7x365 customer service and technical support.
How are credit cards charged?
Upon swiping a credit card in a POS terminal, the information is sent from the merchant to your credit card processor who in turn requests the money from the issuing bank, which is deposited directly into your bank account.
What if I own an ecommerce/internet business. Can I still process credit cards?
Depending on the processor you choose to process your credit card transactions, the answer is yes. For instance, at Federated Payments, we have a proprietary ecommerce gateway called SafePay that allows you to process transactions quickly and securely. This is also known in the industry as “card not present” unlike most storefront businesses that physically swipe the customer’s credit or debit card.
What does PCI compliant mean for processing equipment?
The Payment Card Industry (PCI) dictates that all merchants, regardless of size or number of transactions that accept, transmit or store any cardholder data need to have terminals and card processing equipment that is PCI compliant to ensure the strictest security guidelines are adhered to.
These are just some of the basics for business owners who want to accept credit card processing to help grow their business and customer base.
Stay tuned for Part 2 of credit card processing basics…coming this week!
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A credit card swiping machine has given so many advantages to business establishments since the day when it was invented, that it is difficult to overestimate its usefulness. Among the most popular requirements towards the card processing equipment there is cost effectiveness, saving the time and of course increasing sales. A swiping machine definitely meets these requirements, that is why it is often preferred to any other device for conducting credit cards transactions. Let us have a closer look at the way it works: it will give a better understanding of the advantages it provides.
A swiping machine has a magnetic stripe which picks up the information about a credit card after it was swiped. This information includes name, location, number of the card, as well as the date of expiry. Credit card swipe machine reads these details, and afterwards they are sent together with a purchase amount to the credit card processing, company which redirects them to the bank. The process is fast and the equipment is reliable. There is no reason why a business owner would refuse to have a credit card machine like this.
However, it is mistaken to think that all those machines with a swiping option are the same - they are not. It means you should not pick up the first one you see on sale, there are some important factors that should be considered.
First of all, do you need a mobile or in-store credit card swipe machine? Yes, nowadays such alternative is available, as the portable terminals are as reliable and fast, as stationary ones. Moreover, it brings the whole business of yours to a new level of quality and possibilities, as from now on you can participate in trade fairs and exhibitions not only for promotional campaigns, but for boosting the sales! No need to rent a phone line which used to involve additional expenses, and there is no dependence on the electricity any more. Not to mention that you can arrange remote sales in the most favourable places of your locality and far beyond its range. The credit card swipe machine will remain functioning even in the most distant areas where the signal does not reach thanks to the “store and forward” feature.
Another question to consider is whether your terminal should have a printer for printing out receipts. In most cases it is highly recommended to have this option as the customers prefer to get a confirmation of their purchases. Also, it simplifies the records keeping tasks.
Make sure your processing equipment is user friendly enough. Usually this statement implies the safety measures for the consumers and how easy it is to use a device. In case of credit card swipe machine both these conditions are guaranteed: a client has an opportunity to swipe a card and enter a personal pin code without handing a card to somebody else.
Being easy in use is very important in our time, as in the course of a single day a person might use such machine ten times and more. And eventually all the advantages for the customers will result into maximising the sales potential for business owners.
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To have an online business presence these days is easy. Anyone can set up a free Web site and start selling. But not all businesses are created equally.
To have a flourishing online business presence takes the willingness to accept payment online, and that requires signing on with the right credit card processing company for your business.
Part of the reason is practical. When a customer shopping online they can have $1,000,000 in cash sitting next to them computer but in that form it has no buying power in the virtual shopping world.
Another part of the equation is logistical. A person don’t have to use a credit card when you shop online - most e-retailers will let them mail in a check or money order, but that eliminates the speed and convenience consumers go online looking for.
This brings us back to credit cards (and debit cards). They are not just an avenue to pay for a purchase made over the Internet; they are a proven way to build you business. And not having them - as we will discuss shortly - can cripple your growth and profitability.
To fully realize the speed and convenience that your Web-browsing customers want, an e-merchant has to accept online payments. They like the idea that they can shop for what they want on their schedule. And hand-in-glove with that desire is to be able to pay for the purchase and get it in the delivery conduit immediately.
And that requires credit card acceptance. No two ways about it.
At this point some may be thinking that online storekeepers can take checks electronically, but if they have that service they will also have merchant account capabilities.
However, there is also the issue of credibility. People just flat out love the option of being able to shop over the Web - so much so that their attitudes are drifting in the direction of seeing card acceptance as a measure of validation. That is, any ‘net shopping site that does not take credit cards is more and more being viewed with the skepticism once reserved for slick used card salesmen.
They feel that something is not right if a business doesn’t accept credit cards. And is that the image you want when people think about your Web site. Or when they discuss it with their friends?
In the final analysis, online credit card processing brings so many positive aspects to any retailer operating over the Internet that it’s hard to mount an effective argument against the practice.
If offers your customers speed and convenience. It offer you a measure of credibility in what is becoming an increasingly crowded Web shopping landscape, while at the same time building you business and generating repeat shopping patterns.
So is there still a reason that you don’t want to align your business with a merchant services company? Or to put it another way, it there a reason that makes good sense (and dollars) for you not to accept credit cards?
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Copyright © 2008 Credit Cards: from Choosing Best Credit Card to Application
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